It was another sloppy session yesterday. The market couldn’t get any traction, and breadth continues to deteriorate, and we got a yellow flag from NASDAQ.

NYSE

Advancers 763

Decliners 2,186

Up Volume 529.6 million

Down Volume 3.2 billion

New Highs 60

New Lows 33

NASDAQ

Advancers 653

Decliners 2,426

Up Volume 598.3 million

Down Volume 1.6 billion

New Highs 32

New Lows 37

The last time there were more new lows than new highs was back on January 24 when there were 29 new highs against 32 new lows. That is a yellow flag.

On that note, we asked subscribers to take profits on four hotline ideas this week. The decision wasn’t an indictment of those names or positions but an acknowledgment that risks from the macro to micro level is changing a little, and we thought it would be better to ring the register on the ideas that have stalled the most.

The move gives subscribers more cash and makes it easier to hold longer term positions, even if there is board near-term softness.

Portfolio Approach

We added a new position yesterday to Consumer Staples. We also made some additional bolding changes. If you have any questions, be sure to reach out to your account representative or research@wstreet.com. . If you are not currently a subscriber to Hotline, click here to get started today.

I’m very excited about the start of the year, and the underlying fundamentals of the US economy, driven by the strength and confidence of consumers and increased business investments.

There was lots of buying in Materials yesterday, where we are overweight. I think everyone should have outsized exposure to this sector.

S&P 500 Index

-0.65%

Communication Services (XLC)

-0.04%

Consumer Discretionary (XLY)

-0.47%

Consumer Staples (XLP)

-0.15%

Energy (XLE)

-1.27%

Financials (XLF)

-0.64%

Health Care (XLV)

-1.46%

Industrials (XLI)

-0.94%

Materials (XLB)

+0.22%

Real Estate (XLRE)

-0.26%

Technology (XLK)

-0.52%

Utilities (XLU)

0.00%

Today’s Session

The futures, while indicating a slightly lower open, have rebounded after Mario Draghi, President of the European Central Bank, made statements that it will leave rates unchanged until the end of the year versus previous expectation of this summer. It will also launch a targeted long-term refinancing operation (TLTRO) beginning in September that will continue through March 2021. The ECB cut Eurozone GDP estimates for 2019 from 1.7% to 1.1%, and 2020 estimates from 1.7% to 1.6%. His comments were rather dovish, pointing to vulnerabilities in emerging markets.